This study proposes to study clinical and biological characteristics "of Major Depressive Disorder (MDD) (DSM 111) in approximately 120 outpatients ages 8 to 18 years. This is an extension from findings in inpatient children and adolescents with depression. The study will aim to determine if children and adolescents with MDD evidence reduced Rapid Eye Movement (REM) latency, increased REM time and increased REM time and increased sleep latency. Also the frequency of dexamethasone (DST) nonsuppression will be assessed. Subjects Will be diagnosed using a structured interview, reviewed independently by experienced clinicians and will meet DSM Ill criteria for MDD, presence or absence of other DSM Ill disorders will also be assessed. These subjects will undergo a 1mg DST and 3 nights of sleep polysomnography. Following diagnosis and biological evaluation approximately 80 children and adolescents will be entered into a randomly assigned double-blind placebo controlled study of Fluoxetine, to determine the effectiveness of Fluoxetine for treatment of MDD in this age group. Further we will evaluate if biological, clinical, demographic and family history data can predict who is likely to respond to medication treatment. Clinically antidepressants are widely used in treatment of depression in this age group and yet controlled studies are limited. If medication is effective in some then it would be important to determine in whom.